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By Clare Jim
HONG KONG (Reuters) – China Evergrande has set up a risk management committee as a low-income broker-dealer approaches a months-long debt restructuring of global markets and the world’s second-largest economy.
The real estate giant, which is struggling with $ 300 billion in debt and is at risk of becoming China’s most vulnerable, said Monday that the committee has included government officials and will play a key role in “reducing and eliminating future risks.”
On Friday, Evergrande said it wanted to restructure its maritime debt after agreeing it would no longer be able to meet its demands, prompting the southern state government of Guangdong, where it was established, to intervene to help manage. fall.
“Evergrande has been trying to sell assets to repay the debt, but Friday’s statement says it ‘is’ committed’ and needs help,” said Conita Hung, chief financial officer at Tiger Faith Asset Management. “This sends a very bad signal.”
Evergrande shares fell Monday as they went down, however, at the end of the 30-day grace period which is expected to reach $ 82.5 million.
At the end of Asian business hours, two bond owners said they had not yet received any money.
Evergrande, who had paid for the coupon 11 hours earlier, declined to comment.
If Evergrande were announced at random it could lead to a catastrophic collapse of the economy and beyond, which could undermine the confidence of global businesses, already shaken by the emergence of the Omicron type coronavirus.
“Until there is another announcement everyone is waiting to see if this time will be the first to trigger real events. This also contradicts the febrile equities market expected this week,” said Karl Clowry, a colleague at Addleshaw Goddard in London.
(Graphics: Evergrande would be second only to EM corporate default default Evergrande would be second only to EM corporate default default, https://graphics.reuters.com/EMERGING-DEFAULTS/movanjdlrpa/chart.png)
Chinese officials have been working hard to convince the markets that Evergrande’s problems can be solved.
In a recent move, China’s central bank said on Monday it would reduce the amount of money that banks have to deposit, their second move this year, to release $ 188 billion in long-term repayments to boost economic growth.
Evergrande shares fell 20% on Monday with a much lower HK $ 1.81 after saying late Friday that debtors are demanding $ 260 million and cannot guarantee a rebate, prompting officials to call their chairman.
Investigators say the government’s actions show that Evergrande must have already embarked on a reform process.
Morgan Stanley (NYSE 🙂 said this would include cooperation between governments to secure project projects, and negotiate with lenders at sea to ensure that funds are met.
Supervisors can resume credit negotiations with lenders abroad after the stabilization of operations, the US bank said in a statement.
The recent decline in dollar bonds in Evergrande peaked sharply when the March 2022 issue lowered 4.35 cents per dollar to 27.7 cents, while other volatility such as the 2024 and 2025 cents fell to 20 cents, MarketAxess pointed out.
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The company is one of several developers who are starving due to debt reduction measures, which lead to instability in foreign loans, lower mortgage rates and the sale of shares and bonds.
To address the crisis, regulators since October have urged banks to reduce lending to meet potential developers and to allow more companies to sell real estate.
However, the government needs to intensify its efforts to reduce tensions at the end of the spring season to prevent further economic collapse as interest rates continue to rise, Japan’s Japanese bank Nomura said in a report on Sunday.
Quarterly repayments will be almost double the $ 19.8 billion first installment and $ 18.5 billion second.
Reducing measures such as selling home bonds are unlikely to help Evergrande restructure its revenue because there would be no need for its records, CGS-CIMB Securities said Monday.
Evergrande’s failure to sell projects – almost a November sale for zero – also makes short-term debt repayment “highly questionable”, the brokerage said.
On Monday, a small company called Sunshine 100 China Holdings Ltd said it had failed to repay a $ 170 million loan issued on Dec. 5 “due to the economic crisis that resulted from a number of challenges including a large economic environment and the real estate business”.
The terrorist will launch an unprovoked operation under some credentials, it said.
Last week, Kaisa Group Holdings Ltd, which has China’s largest debt among developers after Evergrande, said its creditors rejected the opportunity to exchange 6.5% offshore bonds on 7 Dec.
The developer has begun talks with some of the bond owners to extend the $ 400 million loan repayment period, sources told Reuters.
China’s small rival Aoyuan Property Group Ltd last week also said the debtors needed to be repaid $ 651.2 million due to debt shortages, and that they could not repay due to lack of funds.
Aoyuan chairman Guo Zi Wen on Friday told administrators at an internal meeting to have “war-oriented ideas” to ensure work and project delivery and reimbursement, a source familiar with the matter, told Reuters.
Such activities will be of great importance to the developer, which will leave negotiations to repay credit to Hong Kong-based corporations, the man said, denying any disclosure of the matter.
Aoyuan did not respond to a request for comment.
The manufacturer’s share price fell nearly 8% on Monday. Kaisa lost 2.2% and Sunshine 100 dropped 14%.
($ 1 = $ 6,3724)
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